Litigation involving Microsoft Corporation Essay

Litigation involving Microsoft Corporation - Essay Example Microsoft is the biggest provider of computer operating systems that facilitate communication and control of an individual’s personal computer. Microsoft also supplies other famous computer programs. Sales that come from the Microsoft software are huge and it is evident that the company is an energetic and a tough competitor. The complexity of determining competitive behavior from the anticompetitive acts is demonstrated by the Microsoft antitrust case. U.S. Department of Justice filed the case and it accused Microsoft Corporation of a variety of anticompetitive practices (Baumol and Blinder 268). The Microsoft antitrust case brings out many issues such as abuse via bottlenecks and bundling. Abuse via bottlenecks can be illustrated by the dominance of the Microsoft Windows. Microsoft Windows is an operating system that is used in almost all the personal computers. Microsoft Windows is a good example of a problem or an issue that is referred to as bottleneck; bottleneck is a pr oduct or a facility that is in the possession of a single company without which the competitor find impossible or difficult to operate. In order to reach majority of the personal computer users, the producer or manufacturer of any spreadsheet, graphics program or a word processor must make use of Windows. It is important to note that there is less likelihood that the competitors or alternative to Windows might capture a large share of consumers. (Baumol and Blinder 280). The existence of the bottleneck is in part due to the fact that Microsoft is largely considered as a good program and its user compatibility is considered desirable. There is need for communication between computer users and this can only be facilitated when they use the same or similar operating systems. In other words, there must be an existence of a network between the users of the computer products for them to be able to communicate effectively with one another and thus, the necessity for compatible software. Su ch a preference offers Microsoft a huge advantage, â€Å"because it already has so many users that a new purchaser who values such compatibility will be reluctant to buy a competing product that will make it more difficult to communicate with those many users of the Microsoft products† (Baumol and Blinder 280). The bottleneck problem or issues arises because Microsoft supplies both the Windows and most of the applications such as Internet Explorer (an internet browser), Excel (this is a spreadsheet program), and Word (this is a word processing program). However, it is worth noting that it is not illegal to become the owner of a bottleneck (Baumol and Blinder 280). The worry about the bottleneck owner (such as Microsoft) is that it uses its bottleneck product (that is, Windows for Microsoft) in a manner that it favors its programs and impairs programs supplied by the competitors (Baumol and Blinder 281). Bundling is described as the pricing agreement under which a substantial discount is offered by the supplier to the consumers if they purchase various products from the firm, â€Å"so that the price of the bundle of products is less than the sum of the prices of the products if they were bought separately† (Baumol and Blinder 281). Bundling can be either legitimate or illegitimate. Microsoft has sponsored its products through the provision of cheap products to computer manufacturers if they purchase Microsoft programs bundles rather than purchasing Windows alone. This form of practice indicates that the rival manufacturers of Internet browsers, spreadsheets, and word processors are disabled in promoting their products to personal computer owners (Baumol and Blinder 281). There are questions regarding the legitimacy and illegitimacy (for